The production possibilities curve illustrates the basic principle that
A. an economy’s capacity to produce increases in proportion to its population.
B. if all resources of an economy are in use, more of one good can be produced only if less of another is produced.
C. an economy will automatically seek that output at which all of its resources are employed.
D. no opportunity cost exists in production.
Answer: B
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If a firm makes production decisions such that it achieves maximum output from a fixed stock of resources, this means that this firm is
a. achieving allocative efficiency c. earning a normal profit b. earning a positive economic profit d. technically efficient
A supply curve shows the ________ of producing one more unit of a good or service
A) producer surplus B) consumer surplus C) total benefit D) marginal cost E) marginal benefit to the producer
An individual holds $10,000 in a checking account and the price level rises significantly. Hence
A) the individual's real wealth and consumption expenditure decrease. B) the individual's real wealth decreases but real national wealth increases. C) there is no change in the individual's real wealth. D) the individual's real wealth increases.
For a risk-averse individual, as wealth increases, total utility
A) increases at a decreasing rate. B) increases at a constant rate. C) increases at an increasing rate. D) is constant.